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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, DC 20410-8000
ASSISTANT SECRETARY FOR HOUSINGFEDERAL HOUSING COMMISSIONER
___________________________________________________________________________ Special Attention of: NOTICE 2005-07
Director, National Servicing Center Deputy Director, National Servicing Center Directors, Homeownership Centers Deputy Directors, Homeownership Centers Regional Directors Deputy Regional Directors Directors, HUD Field Offices GTR for HUD SHM Contractor Issued: January 31, 2005 ___________________________________________________________ Expires January 31, 2006 ___________________________________________________________
Cross Reference: H95-100 _________________________________________________________________________________________________________________
Subject: HUD Single Family Non-Judicial Foreclosure Statute This Notice provides instructions to HUD staff for conducting non-judicial foreclosures on Secretary-held mortgages. The National Servicing Center (NSC) is charged with this responsibility, which may be further delegated to a contractor. The foreclosure statute provides HUD with the option of conducting foreclosures on Secretary-held mortgages utilizing a uniform non-judicial foreclosure procedure instead of the State foreclosure procedure or procedures under other federal laws. In states where judicial foreclosures are the usual or the only method of foreclosure under state law, it will usually be more cost effective for the Department to use the non-judicial foreclosure procedure. The statute may also be used in states presently using state non-judicial foreclosure procedures. All foreclosure actions under this legislation must be initiated in the name of the Secretary of Housing and Urban Development. If, as a result of any foreclosure action, litigation is commenced which requires a court appearance (such as a challenge to the foreclosure or a bankruptcy proceeding), the foreclosure may have to be suspended or terminated and must be referred to the local HUD Office of General Counsel or to the U.S. Attorney's Office pursuant to procedures agreed upon by the local HUD Office of General Counsel. If legal issues other than litigation arise at anytime, it is necessary to consult with the appropriate HUD legal staff. This Notice gives further background information about the foreclosure commissioners, referral of cases and documents that have been developed. In addition, this Housing Notice sets forth procedures to be followed by the NSC and/or the Secretary-Held Servicing Contractor (the Contractor), in the management of foreclosures that will be referred pursuant to the National Housing Act.
Allowable expenses are enumerated in the Statute and in the Final Rule and its Appendix and include title review. Referrals will be made using the sample format that has been prepared for this purpose (Attachment 1) and will be signed by the Contractor. These documents may be revised as appropriate. through direction from the NSC. Use the Specified format (Attachment 1) and attach all items listed on the form. At the time of referral of a case or cases. statement of account. Under the procedures. at 67 FR 13790. the Contractor will also submit instructions to the Foreclosure Commissioner. and a person is not required to respond to. The Office of Management and Budget (OMB) has approved that information collection process under the Paperwork Reduction Act of 1995 (44 U. 2003. a collection of information unless the collection displays a currently valid OMB control number. According to the statute. the Secretary of HUD delegated to the General Counsel. .2 DESIGNATION OF FORECLOSURE COMMISSIONERS BY REGIONAL COUNSEL In a Delegation and Redelegation of Authority published in the Federal Register (FR) on November. HUD may not conduct or sponsor. By notice published on March 26.S. The process of designating persons or entities to serve as foreclosure commissioners is conducted though application. as such. In accordance with the Paperwork Reduction Act. 2002. the title of Field Assistant General Counsel was changed to the title of Regional Counsel and in a subsequent notice published on June 27.) to a foreclosure commissioner. at 68 FR 38382. etc. publication and recordation costs. MANAGING FORECLOSURES Duties of the Contractor 1. there is no requirement for competitive contracting. 15. the “commissioners” are designated appointees and. mortgage. 1995. along with a Notice of Default and Foreclosure Sale Form (Attachment 2) and a Deed Form (Attachment 3). shall be paid a fixed fee for foreclosure service plus a reimbursement for out-of-pocket expenses that are adequately supported by bills and receipts. who retains this authority and redelegated it to HUD’s Field Assistant General Counsel. Refer foreclosure cases with complete packages (note. the authority to designate foreclosure commissioners and to set compensation for the commissioners. should refer the foreclosure cases to any of the designated foreclosure commissioners within the local office's jurisdiction. REFERRAL OF CASES TO FORECLOSURE COMMISSIONERS The Contractor. all existing redelegations of authority to Field Assistant General Counsel were amended to read Regional Counsel for the relevant HUD geographical area. at 60 FR 57525. 3501-3520) and it has been assigned OMB control number 2510-0012.C.
7.1). 3. Prompt remittance of funds to the foreclosure manager by overnight mail delivery in instances of payoffs. Instructions to Foreclosure Commissioner. c. O). H. Review status reports from the foreclosure commissioner. b. which necessitates involvement of HUD Counsel and/or the U.” Provide instructions to the foreclosure commissioners in the event that a third-party purchaser fails to comply with the terms of the sale (see Attachment 4. Instructions to Foreclosure Commissioner. Review all invoices submitted for reimbursement from the foreclosure commissioner and prepare disbursement requests. 5. Timeliness and adequacy of foreclosure. If there are additional bidders. Provide foreclosure sale bid instructions to the commissioner. Instructions to Foreclosure Commissioners.8). Bid amounts can be lower than the value of the property to encourage third-party sales. 9. Instructions to Foreclosure Commissioner. Receipt and adequacy of status reports (see Attachment 4. the account has been reinstated or sufficient payment has been received under a Chapter 13 bankruptcy to return the case for further servicing.S. Enter data into tracking software. L. Monitor and evaluate the performance of the commissioner(s) with regard to: a. pay current collections and third-party sales (see Attachment 4. Evaluate reports and performance. Sec. . Provide all invoices and documentation of expenses to designated HUD staff for 100 percent post-payment audit. The bid amount should be the value of the property minus reasonable adjustments similar to those used in computing the net proceeds of sale under a “compromise offer. 4. Sec. Track the status of each referral until final disposition. 8.3 2. Instruct the commissioner to terminate foreclosure if a deed-in-lieu of foreclosure is accepted. 10. the commissioner 11. H 8). Authorize the foreclosure commissioner to obtain certified documents or affidavits as needed to commence foreclosure. Attorney's Office. 6. Foreclosure sale bids may be for an amount less than the total debt whenever the NSC Director can justify a lower bid amount by establishing that the value of the property is less than the debt. Sec. Send occupied conveyance notification to the occupants of the property. Submission of appropriate notifications to the contractor regarding third-party Commissioner sales within two business days after sale (see Attachment 4. and d. Instruct the commissioner to immediately consult with HUD Counsel about suspending foreclosure in the event of a bankruptcy filing or other litigation requiring court action. Sec.
along with supporting documentation as previously described (see Attachment 4.. Instructions to Foreclosure Commissioner. the commissioner will still be entitled to reimbursement for services and expenses up to the time of termination or withdrawal (see Attachment 4. If a foreclosure is terminated or withdrawn by the Contractor. postage for the required Notices (when the Notice must be posted). The invoice from the commissioner must list all out-of-pocket expenses (e. see also the Foreclosure Commissioner Designation and the Referral Letter (Attachment 1) for information on the percentage of payment in such cases). Vouchers for payment of invoices and documentation of expenses must be submitted to the HUD contractor. The invoice from the commissioner and the SF-1034.” Once completed. Sec. The Contractor must have a separate “Foreclosure Agent ID” for each foreclosure commissioner. Thus. Check with the Real Estate Owned (REO) Division within the appropriate Homeownership Center to make sure the occupied conveyance process has been completed and the mortgagor/occupants have not been accepted as HUD tenants. then the commissioner may submit an interim invoice for out-of-pocket expenses incurred up to the time of suspension. 13. the Contractor should enter the appropriate information into the foreclosure tracking software. using Standard Form (SF)-1034. each with a separate number. If a foreclosure is suspended by HUD for an indefinite period of time.g. and the foreclosure commissioner is asked to retain the case and file. Supporting documentation for all costs over $25 must be submitted with the invoice (see Attachment 4. “Public Voucher for Purchase and Services Other Than Personal”. the contractor will submit each package to their Government Technical Representative/Government Technical Monitor for 100 percent post payment audit. Sec. 12. reports can be generated and sorted by Foreclosure Agent ID.4 can generally be instructed to offer the property to the next highest bidder for the highest price offered by that bidder. Procurement of title insurance policies is not required after the completion of foreclosure under the Federal Non-Judicial Foreclosure Statute. mileage and recordation costs. P2). Instructions to Foreclosure Commissioner. TRACKING FORECLOSURES AND MONITORING FORECLOSURE COMMISSIONERS When the foreclosure referral is made to a commissioner. The tracking software allows creation of a table of Foreclosure Agents. P3. After payment. the voucher for payment will be reviewed and payment made to the commissioner by the contractor. publication. 14. Maintain separate foreclosure commissioner files for a complete record of foreclosures processed and any disbursements made. may be for one or more foreclosure cases. Instructions . “Public Voucher for Purchase and Services Other Than Personal. title evidence. PAYING FORECLOSURE COMMISSIONERS The Contractor will approve the payment to the foreclosure commissioners.
invoice and supporting documentation must be sent to the Contractor. extension 3026. Sec. Single Family Mortgage Division at (202) 708-0080 (these are not toll-free numbers). Single Family Mortgage Division at (202) 708-0080. ________________________________________ John C. extension 3015 (these are not toll-free numbers). Deputy Assistant General Counsel. Legal questions should be directed to Matthew Forman. extension 5217. Assistant General Counsel. or Grant Simms at (918) 581-7168. P4). or Bruce Albright. you may wish to contact Sally Bene of HUD’s Tulsa Office at (918) 581-7168. Office of General Counsel.5 to Foreclosure Commissioner. The voucher. Office of General Counsel. Weicher Assistant Secretary for HousingFederal Housing Commissioner . If you have questions regarding this Notice.
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